In the past, the trading of warrants was time consuming and cost intensive, because it was necessary for a customer in a financial institution, such as a bank, to search by telephone or in publications to locate the best warrant for a consumer. If the consumer wished to purchase warrants, it was necessary for the consumer to first contact his or her local bank which could process the order through a stock exchange or by placing a call to a warrant market maker. Since an on-line information and trading system about traded warrants with executable prices did not exist, the customer in the local bank was not able to provide the consumer with actual on-line information. Hence, there existed a time differential between the placing of a buy/sell order by the customer and its implementation, resulting in a risk of exchange and/or price fluctuations during that time difference.
It was often the case that the implementation of the buy/sell order was based on a limit oriented on the rates of the previous day, since the order could not be implemented on the same day. The reasons for the time delay were either that the order was placed a number of hours before it was executed at the stock exchange or that the trading room telephones of the market maker were often busy during hectic market times. Therefore, local banks often placed blind orders at unknown prices for consumers and did not receive immediate deal confirmations.
The invention disclosed in co-pending U.S. patent application Ser. No. 08/836,713 (referred to herein as “the CATS-OS system” or “the existing CATS-OS system” and incorporated herein by this reference) addresses those problems and provides a computer system for data management and a method for operating the system for the bank, which realizes a data management providing instantaneous data with an improved accuracy and a reduced error probability when processing data transactions, combined with a high level of security. The existing CATS-OS system includes use of a client-server architecture, which has a number of servers, such as a transaction server, a rate server, a hand-off server, a credit server, and a security server. In a typical interaction with the CATS-OS system, the customer or other user of the system connects to the system and is authenticated by a security manager, which allows the user certain privileges depending on the level of user, such as customer, trader, and administrator levels.
In the existing CATS-OS system, a customer normally is allowed to view rates, execute transactions, view those transactions, print reports against transactions conducted, and view positions. A trader is allowed to manually input rates if desired, although this not a normal trader function. Normal trader functions include maintaining instruments as new instruments become available and old instruments expire, generally maintaining the system, maintaining volumes, maintaining the credits, and maintaining the users themselves. The main rate and sales information is input automatically from customer systems. Customers typically have various systems that calculate the prices of warrants. The CATS-OS system essentially receives all of the rates information that comes from customer systems, which may be three or four million updates a day, inputs this information into a separate rate server and then holds this information so that it is available for the customers to deal against.
Currently, the CATS-OS system, which primarily deals with warrants and equities, functions on a standing price basis, in which the host bank for the system issues a price that the bank guarantees for a certain number of seconds. This guarantee allows the users of the CATS-OS system to deal at the price issued. However, in order to limit the risk to the host bank, the host bank typically only authorizes deals up to a certain size at the standing price. Thus, a problem with the existing CATS-OS system is that users may need to perform deals that exceed the host bank's allowable deal size.
In addition, the existing CATS-OS system requires a certain amount of technology and equipment to be available at the customer's or other user's site. This technology and equipment can include a personal computer (PC) and the capability to communicate data. Not all customers or other potential users of the CATS-OS system wish to have these capabilities installed, and instead prefer to deal with warrant trading on the telephone by directly speaking to a trader. This preference directly conflicts with the purpose of the CATS-OS system, which is intended to avoid the situation of customers directly speaking to traders for what are typically smaller sized trades.
Further, while the existing CATS-OS system provides an effective automated electronic trading tool for bank customers and consumers for a single bank, the system displays the process of only one bank. The customers are primarily brokers, so the bank is often unaware of the identity of the actual consumer. Currently, it is not possible, for example, for a plurality of banks to add prices to the CATS-OS system in order to allow brokers to buy and sell warrants of other banks for consumers while dealing with only a single system.